The Tesla 'Gigafactory' is going to be able to produce enough batteries for 500,000 cars by 2020, its creators claim. Since its doubtful Tesla will be selling 500K cars a year by that point, where are those batteries going? Here's how Elon Musk really becomes Tony Stark.
If you've been anywhere on the web or television you've likely seen the laughable hockey stick increase of Tesla Motor's stock price. At this rate they'll soon be more valuable than Facebook, a website that archives your family photos.
Before I get started I have to admit something - I don't fully understand the stock market or what magic formula determines a company's future value.
How limited is my knowledge?
A friend and I once played a game where we took $500 and purchased new stocks (IPOs) with a goal to see who could net the highest return at the end of three months. He spent hours doing analysis, researching companies, technology, market demands, regulations, etc. Me? I picked ones with cool sounding tickers, or as I called them back then stock acronyms. Needless to say my friend made out better than I did.
Getting back to Tesla…
While financial analysts continue to argue over the true value of Tesla Motors, I can't help but feel that Elon has a much larger blueprint still to unfold. I'm not talking diabolical villian a la Lex Luther and his plot to sink half of California. Think more like Wal-Mart of Energy, Google of Gigawatts…bad puns aside, you get the point.
By now we all know Elon does a few things – operates a rocket company, a car company, has his hands in the solar capture business and will soon be a battery maker.
The graphic above is my data-deprived vision of the Elon Empire blueprint.
From roadsters to rockets
Tesla Motors is growing, both in volume and geography (Hello China!). Owners love their cars. Journalists, surprisingly, have few, if any, negative criticisms for the car. The company is doing well and depending on future product, and a lack of any major disaster, they should continue to do well, experience growth and make more money. Yay for profits!
Now this is where things get a bit interesting and are 100% speculation on my part. I'm a dreamer which means I tend to neglect things like physics or costs.
The world needs dreamers. Plus, reality checks are why God created accountants.
So Tesla has, presumably, an abundance of knowledge when it comes to batteries. They aren't skilled at building them (yet) or modernizing them (to my knowledge), but they know how to make them perform in vehicle applications.
You know who else has a great need for batteries, besides me for my baby rockers that eats 16 C-batteries a month, the U.S. Government. Ah yes, Uncle Sam. The same entity that loaned money to Tesla Motors a few years ago.
Government's Demand for Energy Storage
According to a 2012 GAO report the federal government spent $1.3B in three years (2009-2012) on battery and energy storage research.
Keyword, RE-SEARCH. These expenditures weren't to purchase equipment or technology, but rather just a can-we-build-it design exercise. These projects included everything from weapons systems to propulsion for vehicles.
Some of these projects were conducted by universities and federal labs, but industry got a good piece of the work too.
The military is looking at everything from directed energy weapons (Fire photon torpedo!) to ways to make electronic bad-guy-grabbing gadgets more portable, lighter, stronger and more energy efficient.
Now, this isn't to say that Musk Industries (remember, we created this company earlier) is going to jump into the world of building boosters for the next round of ICBM exoatmospheric kill vehicles or design the next spy satellite, but if the Musk Industries Board of Directors decided they wanted a bigger piece of the military industrial complex pie (Space X is on it's way to with Air Force certification)– the door is wide open.
But it isn't just all about war.
Many of the military's needs for energy storage and power solutions align, and are easily transferred, to the public sector.
For example the Army has spent funds looking for ways to develop technology to:
"manage, distribute and store energy in bases of all sizes (from tactical contingency bases to large fixed installations) and the development of microgrids and other architectures for power management."
As more efficient and cost-effective ways come to market that allow the public to produce or harness energy, having personal energy storage systems or neighborhood microgrids becomes a very attractive thing. I can't say I agree that the Pentagon is the right place for the development of future technology, but it will continue to be that test bed simply because it's the largest and most protected federal fund in Washington.
The GAO report goes on to highlight other needs for advanced batteries and energy storage such as space exploration and balancing grid demand (Thanks electric cars!). Again, it seems the government could easily welcome an expansion of Elon's flourishing technology empire.
If I were playing my old IPO game and could invest in one that represented profits from all of Elon's ventures depicted in the graphic, if I could invest in say, Musk Industries, it would seem less risky than investing in just a car company.
Then again I'd probably invest in $MUSK just because I like the ticker better than $TSLA.
For now Tesla is a car company, Space X is a rocket company and Elon Musk is just an ambitious guy running those companies. One day he could assemble all of the pieces under a Musk Industries umbrella, but until that time he'll likely continue to do what he does best – run his companies, prove people wrong and make very neat things.